140 Consider the Key Metrics and Ratios and FCF Conversion Analysis shown below for a potential leveraged buyout candidate: Historial PY Key Mendes FY10 FYL2 Frag F34 Projet 935 FY16 FYLY 27.6% Www Growth pertina Koper ENTOM 11.25 2015 7.55 1998 II.IN 12.7% IN 12.5% 2. The company appears to be switching to a much less capital-intensive business model; if it is executed successfully, that could be a big positive factor for the deal. 10. 12.7% AN AN 12. M 12.2% 22.95 22 622 Cewe To Me 21.25 24.25 23.8 25.7% 25. 25. 25. 32. 12. AS RAW Cast: 473 28 22 27 al 12.N 18. 12.15 13. 9.80 & 0.52 2.1 1.22 x 15% Sy 02 Tatal/INTOA Total Dh/ITEM-CE Total Dah/ITUGUE +- Charge : Net Oscar Not / Caps Net Date/TOA-Copix - Changer i WC 14 00 10 It appears that the FCF growth is driven almost entirely by EBITDA growth in the core business, which could be positive, but could also be a risk factor. 1. 10 DX 2-21 ERITA Meterre 1/ Castel/ Melleslege: Car Capt. Derge / Net interest 19.5 Se 1222 23.5 130 31.0 Ox 15.11 1567.5 Patik/ AD ILUX 10 10. 1015 Net D/ buit: Net Date/Met Capsat 0.0 ON 7.39 1.7% 247 MIX 22 HOS The company generates a high cash balance during the holding period, which completely offsets the risk of debt since cash can be used to repay outstanding debt. IM 5654 5654 565.4 25. M Dinar Sarice Computer Crow Cambre Beb! Papan Nafisa Bike Free Canh How Daeris ry EBITDA Le Caps: Les Nert interest leue Tone: Plus S-Based Cover Puslessonero Carbon holen: Charger in WC Free Cashflow: Car IM YM IM IM 938 48.21 $26.4 921.6 99.2 9.00.0 1425. S.E 1546.21 35.6) 03.01 3.01 1325.01 1393.31 1.D (1.D 2154 115.7] 11.01 1.1 1927 1975 112671 15.5 23.1 439 531 53.2 22 01. 3 17.al 1) 11491 120.21 21.91 2.1.1 E. 435 3.2 4.3 904 * 109.5 20.5 35.5 3942 436.5 Y 325.2 424 17.05 AZN 17% 21.1% 27.08 520N GL.SK 87 11.58 12. IW It seems as if the company's decreasing Working Capital requirements, as a direct result of its business model shift, are driving FCF growth. Click to View Larger Image Based on this analysis, what conclusions can you draw about the viability of this deal? There's room to boost the returns via additional debt repayment, dividends, or otherwise returning cash flow to the PE investors prior to the exit. The company de-levers relatively quickly, so it may be able to raise more debt in the beginning or use a dividend recap midway through the holding period. 140 Consider the Key Metrics and Ratios and FCF Conversion Analysis shown below for a potential leveraged buyout candidate: Historial PY Key Mendes FY10 FYL2 Frag F34 Projet 935 FY16 FYLY 27.6% Www Growth pertina Koper ENTOM 11.25 2015 7.55 1998 II.IN 12.7% IN 12.5% 2. The company appears to be switching to a much less capital-intensive business model; if it is executed successfully, that could be a big positive factor for the deal. 10. 12.7% AN AN 12. M 12.2% 22.95 22 622 Cewe To Me 21.25 24.25 23.8 25.7% 25. 25. 25. 32. 12. AS RAW Cast: 473 28 22 27 al 12.N 18. 12.15 13. 9.80 & 0.52 2.1 1.22 x 15% Sy 02 Tatal/INTOA Total Dh/ITEM-CE Total Dah/ITUGUE +- Charge : Net Oscar Not / Caps Net Date/TOA-Copix - Changer i WC 14 00 10 It appears that the FCF growth is driven almost entirely by EBITDA growth in the core business, which could be positive, but could also be a risk factor. 1. 10 DX 2-21 ERITA Meterre 1/ Castel/ Melleslege: Car Capt. Derge / Net interest 19.5 Se 1222 23.5 130 31.0 Ox 15.11 1567.5 Patik/ AD ILUX 10 10. 1015 Net D/ buit: Net Date/Met Capsat 0.0 ON 7.39 1.7% 247 MIX 22 HOS The company generates a high cash balance during the holding period, which completely offsets the risk of debt since cash can be used to repay outstanding debt. IM 5654 5654 565.4 25. M Dinar Sarice Computer Crow Cambre Beb! Papan Nafisa Bike Free Canh How Daeris ry EBITDA Le Caps: Les Nert interest leue Tone: Plus S-Based Cover Puslessonero Carbon holen: Charger in WC Free Cashflow: Car IM YM IM IM 938 48.21 $26.4 921.6 99.2 9.00.0 1425. S.E 1546.21 35.6) 03.01 3.01 1325.01 1393.31 1.D (1.D 2154 115.7] 11.01 1.1 1927 1975 112671 15.5 23.1 439 531 53.2 22 01. 3 17.al 1) 11491 120.21 21.91 2.1.1 E. 435 3.2 4.3 904 * 109.5 20.5 35.5 3942 436.5 Y 325.2 424 17.05 AZN 17% 21.1% 27.08 520N GL.SK 87 11.58 12. IW It seems as if the company's decreasing Working Capital requirements, as a direct result of its business model shift, are driving FCF growth. Click to View Larger Image Based on this analysis, what conclusions can you draw about the viability of this deal? There's room to boost the returns via additional debt repayment, dividends, or otherwise returning cash flow to the PE investors prior to the exit. The company de-levers relatively quickly, so it may be able to raise more debt in the beginning or use a dividend recap midway through the holding period